The number of start-up companies in the UK has once again seen substantial activity. In 2023, over 753,000 new companies were formed in the UK, according to Companies House.
This is a slight dip from 2021, where almost 1 million companies were formed.
Despite the drop, the UK remains a thriving hub for entrepreneurial ventures, with many start-ups emerging across various sectors, most notably in technology, finance, and e-commerce.
Of course, there is always a high start-up ratio, but there’s also a high churn rate. It’s estimated that 20% of all new businesses fail within their first year, and about 60% fail within the first three years.
In this article, we aim to help you avoid the traps that many start-up businesses fall into.
Mistake 1: Not committing to sales
We hate to say it, but you’re going to need a product to sell, and you’re going to have to enjoy selling it—whether it’s an online course, a new recipe book, or a brand new way of writing a mobile application.
You’ll need to enjoy selling your product to your chosen market morning, noon, and night, which also means you’ll need to find a way to handle rejection.
One of the major causes of cash flow problems is, simply, not having enough cash coming in to cover your costs. A business generates cash in three ways:
- From sales (i.e., its customers)
- Raising it from investors
- Borrowing—whether from a bank or the director
To ensure your business succeeds, you must fully commit to selling your product or service to your market every single day.
Tip: Set aside at least one hour daily to focus on business development and increasing revenue for your company.
Mistake 2: Underestimating the time and financials
Love coming home at 5 p.m. and putting your feet up? How about those Saturday evenings at the pub? Yeah, it might be time to rethink starting a business.
Starting a business is more than a 9-to-5 thing—it’s a 24-hour journey, and you never really switch off. Be prepared for long hours, which means preparing yourself mentally, physically, and emotionally.
You’ll also need to prepare those around you, especially family members, or they might struggle to adjust.
Spend some time planning your week, and talk to your spouse or partner about upcoming events. Communicate what support you need from them while building your business.
Tip: Win the morning. Entrepreneurs often wake up before everyone else for one reason: to be productive.
Mistake 3: Not Setting Targets or Goals
Goals and targets are vital in business. If you don’t know where you’re heading, how can you possibly gauge how well your business is doing?
Your targets and goals don’t have to be financial. They could be based on the number of leads received, website visits, or some other key metric. The important thing is to track your most crucial numbers to understand how well your business is performing.
In essence, you should be able to look at a spreadsheet and determine how your business is doing on a weekly or monthly basis.
Tip: Take time to figure out your key metrics and monitor them either weekly or monthly.
Mistake 4: Not Paying Yourself
Many business owners think that by not paying themselves, they’re doing the business a service.
We get it—you want it to succeed.
But… don’t you have a mortgage? Don’t those rent bills need paying? Sure, you may be able to live off savings for a few months, but that will soon run out. Then what’s the plan?
Look, your business is set up to serve you, not the other way around. Not paying yourself will only lead to resentment and disillusionment.
So, make sure to pay yourself something. Be honest about the work you’ve put into the business and pay yourself what you’re owed. In some cases, this could be 50% of the earnings; in others, it might be less.
The point is simple: pay yourself something.
Tip: Pay yourself on the 10th and 24th of each month. Learn to budget a percentage of your income for yourself.
Mistake 5: Going to big, to soon
ne of the biggest mistakes start-ups make is going big too soon. They hire staff, order more stock after landing a massive contract, and ease off marketing to enjoy the fruits of their labor. Meanwhile, their bank balance dwindles until one day, there’s nothing left.
Taking on staff or buying more stock is a strategic move that should be made when you have the resources to back it up—by resources, we mean a fully stacked sales pipeline. This ensures enough business is coming in to sustain your expenses.
Tip: Start slow. Build the business gradually and increase expenses as the business grows. Learn to say no to unnecessary sales calls and say yes to saving for a rainy day.
